7 reasons why Ed-tech firm 2U Inc. will acquire GetSmarter for $123 million
If you are looking for some tips on trading, Ed tech is one of the hottest new marketplaces to get into. Education technology is regularly causing big stirs in the market. Online education as well as a variety of different nonprofit universities are building distance learning partnerships and ensuring that many companies around the world are having a chance to invest in the future education that could train their clientele. The price tag on these education technology firms is transforming education and offering plenty of chance for private and corporate investment across the world.
One of the newest opportunities in this market comes from Get Smarter. One of the worlds largest online education platforms called 2U has shown interest in acquiring Get smarter and at a fee that is going to be in excess of $100 million.
2U is an education initiative known for empowering a number of different universities around the world. This company was originally founded in the year 2008 and the goal was to build up a series of degree programs online that would one day overtake on-campus programs at major universities. 2U continued its expansion through the acquisition of several other companies around the world. By continuing its online education initiative by picking up several new companies internationally the company was able to continue offering its services on a worldwide scale. Partner universities for 2U only increased its notoriety and the official education solutions that they offered. Today partners include Georgetown University, Northwestern, and why you, Neuhaus University, Syracuse University, SMU, the University of Denver, Vanderbilt and more.
There are a number of main reasons why many people speculating would suggest that the firm 2U inc would consider the idea of purchasing Getsmarter to improve its online initiative as well as its international reach:
The first and most striking point for this partnership and change may come with a recent trade by Perdue University. Perdue has suggested that it’s going to be buying the for-profit Kaplan University to transform it into a nonprofit Indiana public system University online. Even though they were able to acquire this company for just a dollar, Purdue plans on using it to fulfill a giant need in online education. The expansion will pose a direct threat to competition for companies like 2U however for offering affordable and accredited university programs.
Get smarter has an amazing track record as a secondary point. In education technology gets smarter has over 50,000 students across the world and at course completion rate that stands near 90% which is extremely high for the marketplace. This represents an extremely valuable program with a chance for over $17 million in annual revenue and a chance to expand the more than 400 jobs available through the online service. This would be a small portion of the jobs created by 2U but in hiring all of these professionals it’s possible that the program could be somewhat self-contained and have a skilled labor force that would be extensively cheaper to acquire than all of the potential hires involved in creating a brand-new program.
2U is also no stranger to publicly traded acquisitions. In the early stages of developing some of its degree programs its third coordinate with larger universities like the University of Southern California, Syracuse University and more. Since it has continued to purchase small subsets of these programs and offer an amazing track record, it has developed the capital to acquire a major company especially like Getsmarter. With over 37% increase from their 2005 numbers of 150 million in revenue, 2U Bauhaus in annual revenue of over $205 million. With this revenue it could be time for 2U to begin the expansion out into international markets.
As US higher education is already a $505 million marketplace, the chance to acquire a company in South Africa could represent an even larger market available for a company to take on. As the global market for higher education represents a $1.9 trillion industry, if 2U is able to continue its expansion is possible that they could see continued growth and a greater chance at building success in the market. Online education initiatives are filling just a small gap of this $1.9 trillion industry. As the demand for online colleges and programs continues to rise we could see more and more digital universities getting into this marketplace and taking larger chunks of the profits. In fact, as the ease of online University and the availability of these online programs increase we could actually see the profits in the education industry continue to rise alongside the success of online programs.
As well as the chance of representing a larger market in international business, these types of study programs are only becoming much more affordable and in demand for many types of prospective students. Degree courses lasting between 10 to 12 weeks are perfect for working adults who are attempting to create advancement in their careers. Taking an online program can separate applicants and generate more effective responses in a job market that is only becoming more competitive. This is a trend that is far more than on the rise the giants of online education are already becoming major players in the post secondary education world. As many brick-and-mortar universities and individuals are still focusing in on the demand for real classroom experiences, more and more students are seeking out online classes and programs for their ease-of-use. Online is something that is absolutely serious day and not something that simply up trending in favor of eventually returning to physical universities. There are many individuals with in the industry who are even considering Massive Open Online Courses as a full replacement for universities. For-profit enterprise universities like DeVry are all moving towards certificate targeted associations and seeking out major companies similar to Getsmarter to build their programs into the future. As these new partnerships grow we will only continue to see online education grow right along side these programs as well.
GetSmarter also has direct ties to a number of major universities only increasing the accreditation available on their system. The college has direct certificates from employers as well as partnerships with the University of Cape Town, the University of Cambridge, Harvard University, MIT and the University of Chicago. In many cases some of these partnerships and programs would only help to expand the 2U family of partnerships and allow for different types of programs which are not currently offered in their system. This expansion through acquisition could be an excellent way that 2U could continue to build up its course portfolio without having to directly reach out to new partners and continue to build up curriculum standards. 2U does have a wealth of staff members available for creating online documents, marking exams and running these programs but it is simply easier just acquire these programs in partnerships and offer them under the same name. 2U could save considerable expense and ample time by continuing to acquire programs like Getsmarter to drive its growth rather than making new partnerships and continuing to build new online profiles for course selection.
Interviews with Forbes magazine from the founder of 2U also suggest that they are continuing on a buying spree of various worldwide and domestic graduate programs. The CEO and founder has gone on record suggesting that opportunities like this one can continue to drive at least 30% revenue growth into the company from 2016 and onward. Even with the new shifts in technology adding in proven systems as well as proven programs that are backed by other partners, it’s possible to improve the demand for these online programs as well as continuing to build towards the future. Certificate associations as well as the acquisition of other types of university programs will continue to help shape the future of online education initiatives.
As you can see there are a number of big reasons why 2U is likely to acquire Getsmarter at a considerable value. While many people are speculating that they will spend over $100 million to acquire this company is a very good chance that the overall cost of acquisition may need to be raised to account for the extra cost savings and improvements that can be made to 2U as a result of this acquisition. 2U definitely has the funding to acquire Getsmarter for 123 million dollars and to make sure that they secure this product before other major competitors have a chance. In such a competitive industry in which many online universities are continuing their expansion effort it could be a very good idea to consider investment with 2U or keeping a close eye on 2U as they continue their expansion and acquisition of future online education companies. Ed tech is here to stay and it represents one of the most formidable investments for the future and a trend that could be very hard to ignore depending on your future investment strategy.